Call for a european Finance-Climate PACT

We cannot stand by and say nothing. We cannot stand by and do nothing. Today, the mind is outraged by the fate that is promised to mankind. We, citizens of Europe and citizens of the world bound by a common destiny, do not accept that humanity is heading, without reacting, towards climate chaos.

On October 31st, 2017, the United Nations solemnly alerted us[1] on the “catastrophic” gap between State commitments and the reductions in greenhouse gas emissions that would be required to keep global warming below 2 ° C.

 

“Current State commitments barely cover one-third of the cuts needed” said Erik Solheim, director of the United Nations Environment Program. Governments, the private sector and civil society must close this catastrophic gap. “One year after the entry into force of the Paris Agreement, we are far from doing what would be necessary to preserve hundreds of millions of people from a life of misery.” How to fill this gap? How to make up for lost time? What can Europe do ?
How to close the gap ?
Since it is “in the name of US employment” that the United States decided to withdraw from the Paris Agreement, it is fundamental that Europe demonstrates that it is possible to divide by 4 its greenhouse gas emissions while massively creating jobs. It is also essential that Europe take its full part in co-financing the fight against global warming in the countries of the Southern hemisphere.

Divide by 4 our emissions, by 2050 at the latest? The project is colossal but investing heavily in energy savings and renewable energies could lead to “900,000 job creations in France” according to the latest forecasts from French environment and energy agency ADEME[2] and more than 6 million jobs for all of Europe … Thus a good way to significantly reduce unemployment and precarity. A good way therefore to reconcile Europe with its citizens.

No one can doubt the profitability of such a project, the multiplication of extreme weather events is already causing thousands of deaths every year, millions of refugees and increasingly heavy expenses. Global warming is causing not only natural disasters (drought, heatwaves, floods,) but also famines and deadly population displacements. What will happen in 20, 30 or 40 years if hundreds of millions of men and women have to leave their homeland, which has become unlivable? In the medium term, as we all know, it is the World Peace that is at stake, if we are not able to reduce, drastically and urgently, our greenhouse gases emissions.

To finance this colossal project, the European Court of Auditors estimates that each year, a little more than 1.100 billion private and public investments are needed. Admittedly, these investments will all be profitable in the long run, but how to “prime the pump”? Along with a Financial Transactions Tax and a CO2 Tax, two levers must be used as soon as possible :

  1. Monetary creation must serve the fight against climate change.

Since April 2015, the ECB has created nearly 2.500 billion euros and made them available to commercial banks. In the meantime, loans from these banks to the private sector (businesses and households) increased by less than 300 billion. The majority of these liquidities feeds speculation:  every month, the financial markets are breaking new records and the IMF keeps warning us of the risk of a new financial crisis …

There is no need to change the Statutes of the European Central Bank (ECB). We “just” need to transform the European Investment Bank into a “Bank for Sustainable Development” , responsible for providing Member States with financing which will be used entirely for the transition to renewable energy. A European Treaty would/will give each country a Drawing Right corresponding to 2% of its GDP: France would/will have 45 billion euros each year at 0% interest. Germany 60billion …

Since the ECB recently decided to extend its Quantitative Easing policy, it seems urgent to us to “direct” money creation into the real economy and finance, in all the Member States, the energy savings and the development of renewable energies.
  1. Resist European tax dumping by creating a 5% Climate Contribution.

In the last forty years, the average corporate tax rate has been divided by two in Europe: it is now close to 20% while the US federal income tax rate has been stable for more than eighty years at 35%[3].

Even with a rate limited to 5%, a European corporate profits tax would release each year more than 100 billion euros, an amount that would replenish the European budget to co-finance the “Factor 4” project in Europe, invest heavily in research (energy storage, transportation or a new generation of computers, more energy-efficient, …) and greatly increase aid to countries in Africa and around the Mediterranean.

“The world economy is like the Titanic. It accelerates before the shock, warns the IMF[4]. The next crisis is likely to be more serious and more general than that of 2008. “” We have only a few years left to act, “climate experts affirm.

To avoid this double risk (a new financial crisis & climate chaos), it is urgent to deflate speculation and give new ways to fight against global warming. This is why, since Angela Merkel, Emmanuel Macron and a large number of European leaders wish to revive Europe by endowing it with new treaties, we, the signatories of this Call, solemnly ask the European Heads of State and Government to negotiate at the soonest possible, a Finance-Climate Agreement, which would provide the necessary financing for 30 years, given the stakes, to finance the energy transition on the European territory and strengthen our partnership with the countries of the South.

We hope that the monetary creation of the ECB will be put at the service of the fight against climate change and unemployment, and we want a European tax on profits (of 5%) to consolidate a real budget to invest in research and fight against global warming, in Europe, Africa and all around the Mediterranean.

“Our house burns and we look elsewhere,” Jacques Chirac said indignantly at Johannesburg in 2002. Fifteen years later, more and more of us are waking up at night because of the seriousness of the crises that threaten us.
To avoid the catastrophes announced by the United Nations, it is urgent to provoke a collective outburst and, thereby also give a new meaning to the European project by clearly stating our priorities.

Convinced that we will not succeed in taking back our destiny if each nation remains isolated, we urge the Heads of State and Government to implement as soon as possible a European policy that transcends traditional divisions, puts finance at the service of climate and social justice, and allows us to look without blushing at the legacy we leave to our children.

[1] Emissions Gap Report 2017. 31 octobre 2017, www.unenvironment.org

[2] ADEME : Agence de l’environnement et de la maîtrise de l’énergie. Agence gouvernementale française.

« L’ADEME actualise son scénario énergie-climat 2035-2050 ». 19 octobre 2017, www.ademe.fr

[3] 35 % d’impôt fédéral et 3 % en moyenne d’impôt prélevé par les états fédérés. Soit un total de 38 %. Donald Trump souhaite baisser l’impôt fédéral sur les bénéfices mais, pour le moment, il est stable à 35 % depuis 1933. Ce qui n’a nullement empêché le développement de l’économie américaine.

[4] Rapport sur la stabilité financière dans le monde, FMI, 11 octobre 2017